Global Competitiveness, Market Demand and the US Plastics Processing Industry

Transcription

1 Global Competitiveness, Market Demand and the US Plastics Processing Industry Platts Asian Petrochemicals Markets Conference 2016 Grand Hyatt Pudong Shanghai, China August 30-31, 2016 Presented By: Michael D. Taylor Vice President, International Affairs and Trade

2 Agenda Introduction to SPI Shale Gas A Game Changer Overview of the U.S. Plastics Industry Trade Flows in Plastics SPI Plastics Market Watch Key End Market Demand Global Manufacturing Competitiveness Q&A

3 SPI The Plastics Industry Trade Association

4 Source: World bank Pink Sheet Average natural gas prices $/MBtu North American Advantage

5 Natural Gas Prices Have Decoupled From Oil Prices

6 Shale Energy: Economic Contribution To Manufacturing Economic Contribution Summary Employment Total Manufacturing 303, , , ,798 Aluminum 1,171 1,484 1,558 1,693 Steel 19,978 23,610 23,460 26,242 Plastics* 8,974 12,878 14,948 16,438 Fertilizers ,851 5,805 Value Added ($M) Total Manufacturing 36,750 48,776 62,035 71,080 Aluminum Steel 3,166 3,704 3,619 4,024 Plastics* 768 1,098 1,282 1,414 Fertilizers Labor Income ($M) Total Manufacturing 23,826 31,558 39,355 44,872 Aluminum Steel 2,105 2,455 2,389 2,658 Plastics* Fertilizers Includes NAICS Code 3261 (plastics); does not include rubber (3262) or resins (3252). Source: IHS

7 Added Industrial Production As A Result Of Shale Energy Development Iron and Steel Products 2.2% 6.7% 7.4% Resins and Synthetic Materials 1.7% 6.0% 8.1% Basic Organic Chemicals 1.5% 7.1% 9.5% Plastics and Rubber Products 1.5% 4.1% 4.6% Fabricated Metal Products 1.4% 3.2% 4.8% Agricultural Metals 1.2% 6.9% 7.7% Nonmetalic Minerals 1.2% 3.5% 4.1% Petroleum and Coal Products 1.0% 5.8% 6.5% Machinery 0.4% 3.3% 4.0% Total Manufacturing Average 1.3% 3.5% 3.9% Source: IHS

8 Dramatic Cost Shift Ethylene Old Normal: Middle East half the cost of the rest of the world New Normal: Middle East and NA at parity Rest of the world at >2x cost Middle East N America China W Europe NW Asia Source: TopLine Analytics

9 Impacts On Polyethylene Economics Polyethylene Cost US China Natural Gas costs $/MMBTU 2.6 Crude Oil costs $/BBL 54 Ethylene cost $/ton Ratio for one ton of HDPE Ethylene cost $/ton Utilities $/ton Direct Cost $/ton Other Costs $/ton Total Costs $/ton Typical polyethylene margin 3.00% Potential HDPE selling price $/ton Source: NYMEX Sep 2015, TopLine Analytics 1.9x Delta

10 Impacts On Polyethylene Processor Economics Polyethylene Part US China Natural Gas costs $/MMBTU 2.6 Crude Oil costs $/BBL 54 Polyethylene HDPE $/ton Utilities $/ton Labor $/hour $/hour Labor $ Other Costs $ Total Costs $ Typical polyethylene margin 12.00% Potential HDPE selling price $/ton x Delta Source: NYMEX Sep 2015, TopLine Analytics

11 The U.S. Plastics Industry In rd largest industry in U.S. Record-breaking domestic demand of $295.4 billion Shipped $418.4 billion in goods Employed 954,000 people Operated 16,668 facilities in every U.S. state Source: SPI Size & Impact of the Plastic Industry on the U.S. Economy (2015)

12 U.S. $ billions U.S. Demand For Plastics Sets New High Level Apparent Consumption = Shipments + Imports Exports $350 $300 $250 $200 $150 $100 $50 $ Machinery Molds Plastic Products Resin Source: SPI Global Business Trends (2016)

13 U.S. Plastics Industry Trade For 2015 In 2015, the U.S. plastics industry exported goods valued at $59.1 billion, down 5.0 percent from 2014 RESINS $32.4B 8.0% RESINS $14.3B 7.9% PRODUCTS $24.8B 0.7% MACHINERY $1.4B 9.7% Positive trade balance of $7.1 billion PRODUCTS MACHINERY $25.4B $3.0B 14.6% 10.7% $582.2M MOLDS 10.0% MOLDS $1.7B 8.2% Source: SPI Global Business Trends (2016)

14 U.S. Plastics Trade Balance By Segment Resins Plastic Products Molds Machinery Source: SPI Global Business Trends (2016)

15 U.S. Plastics Trade Balance With FTA Countries By Segment In 2015, the U.S. plastics industry had almost a $14 billion surplus with our 20 FTA partners Resins Plastic Products Molds Machinery Source: SPI Global Business Trends (2016)

16 SPI Plastics Market Watch PMW Reports Released: Automotive & Transportation, Healthcare & Medical Devices, Packaging, Building & Construction, Auto Recycling Scheduled Reports: Bioplastics, Bottling, Consumer Electronics To Get Your Complimentary Copies:

17 Continued Growth In Housing Market Forecasted Housing Activity (000) Total Housing Starts ,001 1,108 1,182 1,313 1,425 Single Family ,057 Multifamily New Single Family Sales Existing Single Family Home Sales 4,125 4,475 4,338 4,627 4,816 4,923 4,965

18 Thousands of Vehicle Sales Estimated Light Vehicle Sales for North America 20,700 20,600 20,500 20,400 20,300 20,200 20,100 20,000 19,900 19,800 19,700 19, Source: IHS

19 New Growth Opportunities In Asia-Pacific

20 Global Growth Continues In The Packaging Market

21 Source: Deloitte Touche Tohmatsu Limited, U.S. Council on Competitiveness 2016 Global Manufacturing Competitive Index

22 Shifting Dynamics Among Global Manufacturing Nations As the digital and physical worlds converge within manufacturing, executives indicate the path to manufacturing competitiveness is through advanced technologies. Shift to higher value, advanced manufacturing tilts the advantage to developed nations in the future. Two regional clusters of strength emerge. BRIC breaks down. The rise of the Mighty Five (Malaysia, India, Thailand, Indonesia and Vietnam or MITI-V).

23 Concluding Thoughts Manufacturing renaissance? Transformed global energy situation Reshoring Skilled labor shortage Advanced manufacturing, smart manufacturing, innovation, productivity Additive manufacturing Whither free trade? Risks Known Unknown

24 Thank You! 谢谢 Merci Vielen Dank Grazie ありがとうございました감사합니다 Obrigado Спасибо Gracias Teşekkürler Questions & Answers Michael Taylor Vice President, International Affairs & Trade